Here again is the balance sheet information for Cipher Bank

Here again is the balance sheet information for Cipher Bank. It will be repeated in future questions to make things a bit easier. Note that you can, and may have to, calculate anything marked with a \"???,\" and anything not included or otherwise calculable = $0. Assets Liabilities and Owner\'s Equity Buildings and furniture $900 Cash $80 Commercial paper $500 Deposit in the Fed $320 Checking deposits $2100 Savings deposits $800 Time deposits $200 Borrowing from Bank B $500 Borrowing from the Fed $1600 agency bonds 8iabilities $1000 Home mortgages $1200 Loan to Bank A $400 Loans to firms $1100 Loans to households $1300 Municipal bonds $1400 US government bonds $600 Equity $??? Total assets $8600 Total liabilities and owner\'s equity???

Solution

Required Reserve Ratio = 10 % [Govt. Rule] of Deposits

In the Above question Deposits Are : checking deposits + Saving Deposits +Time Deposits

= $2100 + $800 + $200

= $3100

Required Reserve Ration = $3100-($3100*10%)

= $3100-$310

= $2790

This Amount will be created shown in the Liabilities Side and subtracted Deposits.

Net Income = $240+$20-$50-$80 = $130

And Equity will be difference amount - Net Income

Equity = $2400-$130 = $2270

Total Liabilities and owner Equities = $8600